There are two cases in this assignment. Case $1$ tests Chapter $10$ and Case $2$ covers Chapter $11.$

You can work on these cases in Excel, but please make sure to copy the excel functions in your submitted file, or explain in words your step$-$by$-$step work detail.

Case $1$:

Maine Company is considering Projects S and L$,$ whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable.

WACC: $7\mathrm{.}75\%$

Year $01234$

CFS $$$$2,000$ $$1,500$ $$1,200$

CFL $$$$2,000$ $$800$ $$800$ $$800$ $$800$

Answer the following questions:

$1)$ Calculate NPV$,$ IRR, and MIRR for Project S and L$.($Please copy and paste your excel function in here as your work detail$).$

$2)$ If the decision is made by choosing the project with the higher IRR, how much value will be forgone?

$3)$ Explain the underlying cause of ranking conflicts between NPV and IRR.

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Case $2$:

Bangor Moving Company is thinking of opening a new warehouse, and the key data are shown below. The company owns the building that would be used, and it could sell it for $$100,000$ after taxes if it decides not to open the new warehouse. The equipment for the project would be depreciated by the straight$-$line method over the project's $3-$year life, after which it would be worth nothing and thus it would have a zero salvage value. No new working capital would be required, and revenues and other operating costs would be constant over the project's $3-$year life. What is the project's NPV$?($Hint: Cash flows are constant in Years $1-3.)$

You can work on this case in excel and copy your step$-$by$-$step answer here.

Project cost of capital $($r$)10\mathrm{.}0\%$

Opportunity cost $$100,000$

Net equipment cost $($depreciable basis$)$ $$65,000$

Straight$-$line deprec. rate for equipment $33\mathrm{.}333\%$

Sales revenues, each year $$123,000$

Operating costs $($excl$.$ deprec.$),$ each year $$25,000$

Tax rate $25\%$